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Seneca Nation to stop $110 million casino payments to state

ALBANY – The Seneca Nation of Indians is ending all casino payments to the state government effective next week, setting up a confrontation with Gov. Andrew M. Cuomo.

The decision stops the flow of more than $110 million a year to Albany, a portion of which then goes to host casino communities in Buffalo, Niagara Falls and Salamanca.

The Senecas say they are abiding by the terms of the compact the tribe signed in 2002, which they say called for the tribe to share a quarter of slot machine revenues at the three casinos in Western New York.

"The Seneca Nation has followed the terms of our gaming compact since 2002 and we will continue to do so until it expires in 2023. As written in the compact, the Nation provided a share of our revenue to the state through the end of last year,’’ Seneca President Todd Gates said in a statement Wednesday evening.

The Senecas have paid the state and localities nearly $1.5 billion over the years.

Meanwhile, Seneca officials have let it be known they are uneasy over the growing state-sanctioned gambling in upstate, including the recent opening of del Lago Resort & Casino in Seneca County located between Rochester and Syracuse. It is uncertain how much that new casino is affecting the Seneca casino operations.

The Seneca president indicated it is possible some sort of arrangement can be made with localities affected by the drop in revenue sharing payments.

“Although the revenue share has ended, we remain committed to being good neighbors in the communities where we have gaming facilities and we look forward to working directly with them to continue the economic progress of Western New York,’’ Gates said.

Word of the Seneca Nation’s decision came in calls Wednesday to the Cuomo administration, state lawmakers and local government officials.

On Wednesday night, the Cuomo administration rejected the claims by the Seneca Nation. The state believes, according to Cuomo spokesman Richard Azzopardi, that under the original compact, along with a 2013 memorandum of understanding signed by Cuomo and the tribe, that "it's clear this payment structure remains in place.''

"If the new leadership of the nation has questions, or a different interpretation of this, they haven't shared them with us, but we're willing to meet and discuss any issues,'' the Cuomo spokesman said.

While state officials were caught by surprise, Seneca officials insisted the state should have seen the day coming when the revenues would stop.

“This is nothing new. It’s what the compact says in black and white language,’’ said a Seneca representative who spoke on condition of anonymity.

The decision comes as Cuomo and lawmakers are trying to put together the final pieces of a 2017-18 state budget. On a local level, Niagara Falls is expected to see the biggest impact; the city gets more than $20 million in annual revenue sharing payments from the casino there.

Niagara Falls Mayor Paul Dyster had no comment. A spokesman for Buffalo Mayor Byron W. Brown said that the matter was being reviewed.

The Senecas and the state, during the administration of Gov. George E. Pataki, OK'd a three-casino compact deal in 2002. The Senecas say that deal’s language is clear that state revenue sharing payments can be halted after 14 years.

“We’re now in the 15th year of that compact,’’ the Seneca representative said. “This is the Nation following the language of the compact.’’

The compact provides for a 21-year casino exclusivity arrangement for the Senecas in a large area of Western New York.

Besides the casino payments to the state and localities, the Seneca Nation said it has invested more than $1 billion in commercial development at its casinos, including a $40 million expansion of its Buffalo casino that is nearing completion.

One state lawmaker who talked to Gates Wednesday said the Seneca leader made clear the tribe still wants to work out some kind of financial arrangements with localities. “They’re saying they’re going to stop making payments to the state and will negotiate with localities what kind of payments they will make,’’ said Assemblywoman Crystal Peoples-Stokes, a Buffalo Democrat.

The lawmaker said Gates did not indicate what specifically triggered the timing of the decision to notify state officials Wednesday “except for the fact that it is clearly stated in the compact.’’ She said she was certain there are “some underlying issues” the Seneca Nation has with the state for the timing of the calls.

“It took me by surprise,’’ Peoples-Stokes said of the call from Gates, a reaction echoed by other lawmakers on Wednesday. The Buffalo casino is located within Peoples-Stokes' district.

The Seneca Nation is basing its position on a brief section – found on page 18 – of the 793-page compact, which was signed in the summer of 2002 by then-Gov. Pataki and Seneca President Cyrus M. Schindler Jr.

The compact lays out a sliding schedule of payments the tribe would make to the state, which began at 18 percent in the first year of the Niagara Falls casino operation. “Years 8-14: 25%, with payments during this period to be made on a quarterly basis,’’ the wording of the compact states.

After year 14, the compact appears to be silent on the percentage of slot machine revenue that the Senecas are required to pay New York State.

It was not immediately clear Wednesday evening how much money the state or localities were projecting to receive in the coming year from the Seneca casino payments. The state’s new fiscal year starts April 1, and Cuomo and lawmakers are in the midst of trying to get a final deal on a new spending plan.

The tribe's calls to state officials Wednesday comes a week or so after Seneca leaders began telling its members of its plans. It also comes several months after the original compact was renewed for another seven-year period – which automatically kicked in after neither side in the deal objected in writing to the extension.

The Seneca Nation is one of three tribes – besides the Oneida Indian Nation and the St. Regis Mohawks – to operate lawful casino facilities in New York under deals with the state and approved by the federal government. The Seneca casino developments were part of a broader gambling expansion approved by the state shortly after the 2001 World Trade Center terrorist attacks.

Cuomo fought with the Senecas in 2013 after the tribe had halted revenue sharing payments. The Seneca Nation claimed New York had breached the original compact’s term by allowing new forms of gambling at racetrack-based casinos in Western New York. Cuomo threatened to give a commercial casino license in Niagara Falls if the tribe did not restart the payments.

The dispute ended with the Senecas releasing $349.7 million to the state and localities; the tribe was able to keep nearly $210 million of the withheld funds at the time. The deal was among the settlements Cuomo made that year with New York’s Indian tribes that are in the casino business. That fall, the tribes stayed out of any efforts to block Cuomo’s 2013 statewide referendum campaign to legalize seven new commercial casinos in New York, three of which have opened in the past couple months.

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